If the COVID-19 crisis and ensuing disruption have shown us anything, it’s that a solid partnership between finance and HR is critical to weathering economic storms. When they’re working well together, both teams can contribute to and analyze possible scenarios and collaborate to decide next steps based on real data.
To discuss how CFOs and CHROs can work more closely together to manage through the pandemic and beyond, the American Institute of Certified Public Accountants (AICPA) recently hosted “COVID-19: Workforce Optimization for Business Continuity” as part of its pro bono COVID-19 business continuity webcast series. Joining AICPA managing director Ash Noah were two panelists: Kyle Hawke, a partner in McKinsey & Company’s Corporate Business Functions practice; and Nancy Estell Zoder, vice president, HCM product strategy at Oracle.
During the discussion, the trio discussed the impact of the crisis and Zoder shared four ways a unified finance and HR platform can help companies make better decisions (even when they’re difficult) to emerge stronger as the uncertainty dissipates.
During the webcast, McKinsey’s Hawke reviewed insights from recent research on the importance of having a CEO who puts talent at the top of his or her agenda. In any company, the “group of three”—or G3—includes the CEO, CHRO, and CFO. Each has a specific role, but when they work together, something powerful happens. The CEO establishes the leadership direction. The CHRO is the keeper of values and focuses on the human element of the business. And the CFO is the keeper of the purse strings—and the one who is constantly running “what if” scenarios in his or her head.
Together, the G3 has a holistic view of the organization and can make decisions about next moves while keeping the company’s direction, values, and financial health in mind. It’s nearly impossible to do that without ditching siloed systems in favor of a unified platform with common data and systems that ensure everyone is working of the same information when making critical decisions.
When a crisis strikes, organizations go through five phases of recovery, which McKinsey’s Hawke referred to in the webcast as the “five Rs.” McKinsey describes them in its body of research on the implications for business on the impact of the novel coronavirus, as follows:
Each business and industry will pass through these phases on a different timeline. But when HR and finance are aligned, they can more easily agree on how to navigate the current phase and the best next steps.
This crisis has forced organizations to closely analyze spending and prepare for an uncertain future. No one knows how long the crisis will go on. But simply cutting costs through layoffs, furloughs, salary reductions, reduced hours, or other employee-related methods could end up costing more in the long run.
Zoder shared an anecdote about medical facility management’s decision to furlough employees to cut costs. Due to a gap in planning, they realized that the employees in question were represented by unions, which would have caused an enormous HR, legal and financial challenges. Integrated financial and HR data can help prevent such missteps.
HR and finance need to work together in scenario planning, making decisions about the best course of action in various circumstances. Organizations should know the cost of onboarding new employees, and the cost of re-boarding existing employees or furloughed employees who have been away from the business for a while. It’s also important to recognize that the talent war existed before the crisis. To effectively manage retention, companies must ensure that employees have growth opportunities and are contributing to the productivity of the business. Organizational communication, and regular communication from their managers, is critical to ensure employee engagement and demonstrate empathy during this difficult return.
Proper workforce planning also provides growth opportunities, which is essential to retain highly talented employees. Growth opportunities, work and personal, are required to be a preferred employer. With a unified system, finance and HR functions have deeper insight into not only the hard costs related to payroll and other compensation, but also the costs of making rash decisions and failing to retain the company’s best talent. Unifying HR and finance data and processes creates the environment to do so.